Nokia Siemens Networks Pays $1.2 Billion for Motorola's Wireless Business

Vendor says transaction will bolster its positions in the U.S. and Japan, gain technology, strengthen research and development, bring new customers.

Nokia Siemens Networks, a joint venture of Finland's Nokia Oyj and Germany’s Siemens AG, said it will pay $1.2 billion in cash for the greater part of Motorola Inc.’s wireless operations, a move it expects will yield a stronger foothold in the U.S. and Japan and pump up declining profits.

The companies said that the deal, which will be financed from current Nokia Siemens cash reserves and third-party financing already in place, will close at the end of this year.

Nokia Siemens is paying about .32 times the $3.7 billion in 2009 revenue generated by Motorola’s wireless network infrastructure business.

“We are purchasing the majority of what Motorola has reported as its network business,” said Rajeev Suri (pictured), Nokia Siemens chief executive, in an online briefing.

“Motorola, Siemens, Nokia it’s really hard to imagine a more powerful combination than those three names,” he said.

Under terms of the deal, Nokia Siemens will acquire Motorola’s CDMA, LTE, Wideband CDMA, GSM and WiMax assets, some 7,500 employees, research and development facilities in the U.S., China and Japan, a roster of new customers including 50 operators, and stronger positions with existing accounts such as China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone--what Suri described as a “truly terrific global footprint that expands what we have already today.”

Greg Brown, Motorola co-chief executive and Motorola Solutions chief executive, said that the deal allows Motorola to retain about $150 million in accounts receivable, a handful of customer financing notes, its business unit that makes iDEN equipment--a generator of about $400 million in annual revenue--patents related to its wireless network infrastructure business and cash flow through the end of this year.

The deal includes cross licensing rights granted to Nokia Siemens to access certain Motorola intellectual property associated with its wireless network infrastructure business, Brown said.

Nokia Siemens driven to expand market reach, add to share positions

Suri said that the deal also was prompted by Nokia Siemens’ goals to improve its position in certain geographic regions, particularly in the U.S. and Japan—“we’ve never made any secret about our desire to expand our presence in North America,” he said—access to CDMA and WiMax technology, the opportunity to create more value, and Motorola’s talent pool.

“First and foremost, this deal is about customers,” Suri said.

Of the 7,500 Motorola employees who will be transferred to Nokia Siemens, about 1,600 work at Motorola’s Schaumburg, IL headquarters.

Suri said that those employees will not be relocated and that no layoffs are planned at this time.

With the transaction, Nokia Siemens’ will jump from fifth to third in the North American market based on 2009 sales and in Japan it will climb to the top position among foreign vendors, he said.

“Our ambitions do not end there,” Suri said.

“With the expected addition of CDMA and WiMax to our portfolio we believe we are better positioned than ever before to help customers transition to next generation technologies in the way that best suits their business and technology needs,” he said.

“We expect to strengthen our position in GSM and Wideband CDMA,” Suri said. “In LTE this deal vaults us further ahead of the competition,” he said.

The deal is a further step toward the parting out of Motorola, and, when completed, will leave only Motorola Solutions, which targets the government, public safety and enterprise customers for sales of communications equipment, and Motorola Mobility, the handset and cable set top business. Beginning in Q1 2011 each will operate as an independent, separate operation.

“This transaction will further sharpen the strategic focus of our remaining Motorola solutions business,” Brown said.

He said that Motorola has filed an 8K with the U.S. Securities and Exchange Commission further detailing terms of the transaction.

TAGS: wireless,infrastructure,network,Motorola,Nokia Siemens

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